B2B2C Ecommerce: How to Tap into Economies of Scale

Companies have historically relied on two primary options when selling products: sell to a business (B2B) or a consumer (B2C).

However, with the rapid rise of ecommerce and remote work, the lines between these two sales channels have blurred, and the sales ecosystem has spilled over to craft a new framework — B2B2C ecommerce.

When it comes to B2B2C, many people often confuse it with other sales channels — which makes sense considering businesses are constantly evolving and changing. 

It is important for companies to understand what B2B2C is, and how it compares to other frameworks like it: 

B2B2C.

B2B2C stands for Business-to-Business-to-Consumer. 

As the name implies, it’s a business model where a company sells its product or service in partnership with another organization to an end customer. Unlike when you white label a product — where a company rebrands an item to present it as its own — the end customer understands that they are buying a product or using a service from the original company

Channel Partnerships.

A channel partnership describes when a company partners with either a producer or a manufacturer to market and sell their products, services and technologies. 

Unlike B2B2C, channel partnerships often end up with a company re-branding the products or services they are selling as their own instead of the original manufacturer.

Direct-to-Consumer.

Direct-to-Consumer is fairly straightforward: a business or brand sells their products directly to the end consumer. 

As opposed to B2B2C, there is no middle man between the consumer and a business.

Many B2B businesses are expanding to the B2B2C for two primary reasons: the rise in remote work and scalability. 

Rise in Remote Work. 

The move to B2B2C for many companies has come due to the rise of remote work since the COVID-19 pandemic. As seen in this global survey of CIOs, it is a trend that shows no sign of stopping.

Because so many customers work from home, the way they access that market has changed. While they may have once been seen as a luxury, home-delivery services have grown significantly in the last few years — presenting a real business opportunity.  

Scalability. 

Few B2B leaders can rapidly scale their operations without compromising service levels or overall sales efficacy. Thus, instead of attempting to ‘be everything’ on their own, many B2B companies choose to go the partnership route and morph into a B2B2C model to maximize business opportunities and achieve scalable growth.

For B2B2C to work, both companies need to be targeting the same consumer base and provide value that each company couldn’t achieve on its own. Here are some examples of how the B2B2C model benefits everyone involved:

• Business A: Builds brand credibility quickly and taps into an existing customer base for lower acquisition costs. 
• Business B: Offers a new or complementary service without investing internal resources and gains additional data about customers.
• Consumer: takes advantage of a convenient service backed by a reputable source.

The lines between different business models are vanishing. 

According to McKinsey analysts, U.S. ecommerce penetration saw 10 years of growth in three months, jumping from just over 15% at the end of 2019 to 35% by the end of Q1 2020.

While a brand manufacturer can now sell to anyone asking online, it doesn't mean that every type of business will adopt the B2B2C model.

Here's why:

The B2B2C business model requires a certain level of digital maturity.

B2B2C is a type of business model that is typically driven by digitalization and a desire to sell online. It requires a strong commitment to executing digital transformations and adding new integrations to your online commerce setup — not to mention a prioritization of ecommerce. 

At present, not every retail business is there yet.

The product itself can be a limitation.

Not all products are ideal for this type of business model. 

Complex, regulated or niche products such as medical or industrial equipment are not viable to sell to end customers directly.

You are not ready to negotiate.

B2B2C arrangements can be tough to sign off if your company isn't willing to give them proper credit, share customer data or provide fair compensation.

It is also critical to ensure that you are even compatible with the other organization when you're entering a business partnership. If they have different business priorities, how will you be able to negotiate with them?

A successful B2B2C business relationship relies on the communication and compatibility between the two companies coming together. 

Within this relationship, one partner typically already has access to the consumer market, while the other desires to access the consumers. Finding the right balance in helping the other succeed critical to the relationship’s long term viability. 

This type of relationship is often dependent on two main features:

1. Direct access to consumer data. 

For a business looking to enter a consumer market, the inclusion of consumer data can be invaluable to their prospects. The more data they have on the market and the consumers they’re attempting to reach, the better their chance of a successful business plan. 

If one of the businesses in this relationship is unwilling to exchange data, the partnership could lose steam very quickly. 

2. Brand recognition. 

Brand recognition is often the primary difference between a sale and a missed opportunity. 

One of the primary reasons that B2B2C business relationships occur is due to the brand recognition on the part of one of the companies. By using their partner’s brand recognition, a business can join the consumer market with a leg up on their competition.

While B2B2C ecommerce offers a host of attractive benefits for brands, it can be challenging to orchestrate. 

B2B2C partnerships require work from both sides — particularly when it comes to:

• Data sharing: Successful B2B2C ecommerce partnerships require real-time integrations between all the participants. Data for customer records, stock, inventory, pricing, promos, marketing strategies and loyalty data integrations must be synced together. Failure to do so can result in a fragmented customer experience (CX). 
• Customer ownership: B2B2C partnerships thrive when both parties contribute equal amounts of customers and share customer ownership. Or one party maintains all customer records and fairly compensates the 'contributor' for driving sales. 
• Brand differentiation: Unlike "white label" partnerships, B2B2C assumes clear differentiation between each company.
• Promotion: Both parties need to contribute to promoting the products fairly. If the partner doesn't give your products a decent spotlight, why bother having them on board?

To better understand how companies have employed a successful B2B2C model, let’s look at some popular examples:

Instacart and grocery stores.

Instacart is an excellent example of how B2B2C works for newer tech start-ups and legacy grocery stores to add a beneficial service for consumers. 

With busy schedules, consumers often don't have time to go to the grocery store — today's shoppers increasingly prefer when someone else does the shopping for them. Most grocery stores don't offer this service because it often involves significant investments in technology and staffing. 

In comes Instacart. They offer an ecommerce site where consumers can mimic the entire grocery shopping experience directly from Instacart's ecommerce website. 

In this example, Instacart can reap the benefits of partnering with the existing grocery stores — giving them a built-in customer base — while grocery stores can offer a service to their customers without investing their resources. Ultimately, although the end customer understands that they're purchasing products from the grocery store, they come to associate grocery shopping with Instacart.

Affirm and ecommerce retailers.

How the Buy Now, Pay Later company Affirm works with ecommerce retailers is another example of B2B2C. 

Let's consider the partnership between Affirm and BigCommerce merchant UPLIFT Desk. 

Instead of offering financing, UPLIFT Desk partners with Affirm to offer customers the option of monthly payments. In this example, customers know that they are working with Affirm for the payment solution — not UPLIFT Desk — which is critical for the B2B2C ecommerce model.

The B2B2C model can help scale your customer acquisition efforts by leveraging different sales channels and partners for a multitude of purposes. 

Still, running successful B2B2C operations is challenging, especially when negotiating win-win partnership terms, ensuring data exchanges and customer experience consistency across distribution channels, maintaining a supply chain and figuring out customer ownership.

By partnering with BigCommerce, many of the difficulties of running a B2B2C can be alleviated. With a customizable B2B2C data display, specified marketing activities, professional services and a 24/7 support staff, BigCommerce provides a platform with lower costs and high efficiencies.